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A report from the field (thanks K) from someone who just canceled a green card.

Form I-407 (warning: PDF) was mailed to the U.S. Embassy in London and returned — festooned with all the appropriate official rubber stamps ‘n stuff — in one week.

That’s really good.

Why having a green card for 8 years is bad

For what it’s worth, this was a successful relinquishment of the green card which prevented my correspondent from being subjected to the exit tax rules. Here is how it works and what it means to you. It might be useful for you to relinquish your green card in 2012, too.

People who are “lawful permanent residents” can be subjected to the U.S. exit tax.

A “lawful permanent resident” visa is commonly called a “green card.”

A green card holder only falls victim 🙂 to the exit tax if he or she holds that status too long.

“Too long” means that the person was a lawful permanent resident in 8 or more years out of the last 15 years — including the current year.

Once you hold the green card in 8 of the last 15 years (including the current year), you are defined as a “long-term resident.”

Long-term residents are subjected to the exit tax when they cancel their green cards.

Therefore, the first line of defense against the exit tax is to NOT be a long-term resident. Get rid of the green card before you hit the magic 8 years.

If you received your green card in 2006

The current year is 2012. If you received your green card in 2006, then you have been a lawful permanent resident “in” 7 years already: 2006, 2007, 2008, 2009, 2010, 2011, 2012. There is at least one calendar day in each of those years on which you held the green card — the lawful permanent resident visa.

If you hold the green card on January 1, 2013, that will be your eighth year of holding a green card. That means you become a long-term resident, and that in turn means you are subjected to the exit tax rules when and if you give up your green card.

Your objective is to NOT have the green card on January 1, 2013.

If this is you, I suggest you strongly consider canceling your green card before December 31, 2012.

Exceptions, weird rules, disclaimers, etc.

I am not your lawyer. This is not competent legal advice. There is a metric tonne of weird little rules that might work well for you and stop the exit tax — short of actually giving up the green card. Talk to someone smart and get good advice. This is a big step with tax consequences as well as real life consequences.